Prosperity Bancshares Inc .'s ( PB ) first-quarter 2013
adjusted earnings of 86 cents per share marginally exceeded the
Zacks Consensus Estimate of 84 cents. This also compares favorably
with the year-ago earnings of 77 cents.BB&T CORP (BBT): Free Stock Analysis ReportCOMERICA INC (CMA): Free Stock Analysis ReportFIFTH THIRD BK (FITB): Free Stock Analysis
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The improvement came on the back of better top-line performance,
partially offset by higher operating expenses. Moreover, loan and
deposit balances improved in the quarter. Further, capital ratios
were stable, while credit quality was a mixed bag.
Net income in the quarter came in at $49.3 million up 35.1% year
Performance in Detail
Prosperity's total revenue in the reported quarter came in at
$141.5 million, soaring 34.0% from $105.6 million in the prior-year
quarter. Moreover, this beat the Zacks Consensus Estimate of $132.0
million by 7.2%.
Net interest income surged 32.1% year over year to $108.1 million.
However, net interest margin dipped 22 basis points from the
prior-year quarter to 3.42%.
Non-interest income augmented 68.1% year over year to $23.4
million. The increase was primarily due to the acquisition of
American State Financial Corporation ("ASB").
Non-interest expense came in at $55.8million, up 37.8% from $40.5
million in the prior-year quarter. The rise was mainly due to
additional non-interest expenses associated with ASB.
The efficiency ratio increased to 42.40% from 42.23% in the
prior-year quarter. The rise in efficiency ratio indicates
deterioration in profitability.
As of Mar 31, 2013, total loans were $5.3 billion, rising 35.8%
from $3.9 billion as of Mar 31, 2012. Total deposits increased
37.1% year over year to $11.7 billion.
Asset quality was mixed in the quarter. The ratio of allowance for
credit losses to total loans dipped to 1.05% from 1.33% in the
On the other hand, net charge offs were $0.32 million,
significantly up from $0.1 million in the year-ago quarter.
Moreover, total nonperforming assets stood at $18.1 million, up
21.9% from the year-ago period. Likewise, provision for credit
losses increased significantly to $2.8 million from $0.2 million in
the prior-year quarter.
Profitability and Capital Ratios
Prosperity's capital and profitability ratios exhibited a modestly
cautious approach in 2013. As of Mar 31, 2013, tier-1 risk-based
capital ratio was 14.77% compared with 15.70% as of Mar 31, 2012.
Moreover, total risk-based capital ratio came in at 15.61% as
against 16.80% at the end of the year-ago quarter.
The annualized return on average assets was 1.33% as of Mar 31,
2013 compared with 1.39% as of Mar 31, 2012. Similarly, annualized
return on common equity came in at 9.23%, up from 9.15% as of Mar
In Apr 2013, Prosperity concluded the acquisition of Coppermark
Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank.
Upon acquisition, the company took over total assets worth $1.2
billion, total loans of $847.6 million and total deposits of $1.1
In Jan 2013, Prosperity closed the acquisition of East Texas
Financial Services Inc. and its fully-owned subsidiary First
Federal Bank Texas. Following the acquisition, the company took
over total assets worth $165.0 million, total loans of $129.3
million and total deposits of $112.3 million.
Performance of Other Stocks in the Same
Comerica Inc .'s ( CMA ) first-quarter
2013 earnings beat the Zacks Consensus Estimate. The results
reflected reduced expenses, partially offset by decline in
Fifth Third Bancorp 's ( FITB ) first-quarter
2013 adjusted earnings per share beat the Zacks Consensus Estimate
by a nickel. Improved credit quality aided by lower provision for
loans and leases and strong capital position were the
BB&T Corporation 's ( BBT ) first-quarter
2013 earnings marginally surpassed the Zacks Consensus Estimate.
The results reflected growth in revenues and lower provision for
credit losses, partially offset by a rise in operating
Prosperity's strategic acquisitions and organic growth is quite
impressive. Moreover, the company's strong balance sheet is
expected to bode well for its overall expansion going
However, the prevailing low interest-rate environment, sluggish
economic growth, significant exposure to real estate loan portfolio
and a stringent regulatory landscape are expected to adversely
affect the company's financials in the subsequent quarters.
Prosperity currently carries a Zacks Rank #3 (Hold).